Types of Commercial Loans and Why You Might Need Them
REASONS FOR GETTING A COMMERCIAL LOAN
- Starting a business
- Purchasing or leasing a building
- Purchasing or leasing equipment
- Building expansion
TYPES OF COMMERCIAL LOANS
Acquisition Loan – Acquire property or any asset
Development Loan – Develop and improve acquired property
Bridge Loan – Used to bridge the gap while a borrower is waiting for long-term or permanent loan
Construction Loan – Used to fund construction work of a property
Asset-Based Loan – Multipurpose; secured by various assets like equipment and accounts receivable
Refinancing Loan – Used to pay off an existing loan
Debt Consolidation Loan – Combines debt into one loan allowing borrowers to make single monthly payments
LOAN ASSESSMENT
- Character – refers to past commercial experience, abilities and skills
- Cash flow – refers to the business’ cash ins and outs showing there are enough funds to cover loan requirements
- Collateral – an item or asset which serves as security for the bank in case of potential loss